State of California Signs Agreement with DOL to Reduce Employee Misclassification

State of California Signs Agreement with DOL to Reduce Employee Misclassification

February 20, 2012

Earlier this month, the U.S. Department of Labor (DOL) issued a press release that our Santa Ana, California attorney Vincent Howard has been following, announcing the signing of a joint memorandum of understanding between Nancy J. Leppink, the deputy administrator of the DOL's Wage and Hour Division (WHD) and Mary Morgenstern, California's Secretary of Labor--regarding the ongoing problem of employee misclassification.

At a press conference held on February 9th, Leppink and Julie A. Su, the Labor Commissioner for California, discussed how the DOL and the state of California will work together to implement new efforts guided by this memorandum--in order to protect the wage and hour rights of employees, to properly classify independent contractors, and to level the playing field for honest employers who are threatened by the practice of employee misclassification.

Labor Commissioner Su stated that California is proud to work in partnership with the DOL in order to attack the illegal practice of employee misclassification--and to address the problems of the underground economy. Su also claimed that her team is ready to work with the DOL in order to raise the labor conditions for hardworking employees and employers across the golden state.

As Vincent Howard discussed in a previous Orange County wage and hour blog entry, employee misclassification is a raging problem in workplaces throughout the state of California and the country. In 2011, nearly 6,800 wage and hour violation lawsuits were filed, and the DOL's WHD collected over $5 million in back wages for overtime and minimum wage violations under the Fair Labor Standards Act (FLSA) that stemmed from employees being misclassified as independent contractors instead of employees.

The act of employee misclassification presents a serious problem for employees, as they are often denied access to important employee benefits and protections that they are legally entitled to, such as minimum wage payment, overtime compensation, family and medical leave, and unemployment Insurance. Misclassifying employees also poses a threat to honest employers who often struggle to be competitive against dishonest employers, who gain an unfair competitive advantage by violating FLSA laws and regulations. The DOL states that employee misclassification also creates massive losses for state workers' compensation funds and unemployment insurance, and according to the IRS, the act of employee misclassification costs the U.S. Treasury over $1 billion per year.

These state government memorandums of understanding stem from the DOL's Misclassification Initiative, which was launched under Vice President Biden's Middle Class Task Force, with the aim of detecting, preventing, and eliminating employee misclassification in workplaces across the country. This month, California joins Colorado, Connecticut, Illinois, Maryland, Utah, Hawaii, Massachusetts, Missouri, Minnesota, Montana and Washington--all states that have signed similar agreements.

Our Riverside employment attorneys, led by managing attorney Vincent Howard, represent employees who have been improperly classified in the workplace, or who have experienced violations of the Fair Labor Standards Act, or California Labor Codes violations in cities throughout Orange County, or Southern California. Contact Howard Law, PC today, for a complimentary consultation about your wage and hour rights.

We serve clients throughout Southern California including, but not limited to, those in the following localities: Orange County including Santa Ana and Anaheim; Los Angeles County including Los Angeles, Burbank, Pasadena, and West Covina; Riverside County including Cathedral City, Coachella, Corona, Hemet, Indio, Moreno Valley, Murrieta, Palm Springs, Riverside, and Temecula; and San Bernardino County including Chino, Fontana, Hesperia, Ontario, Rancho Cucamonga, San Bernardino, and Victorville.